ACCOUNTING

STANDARDS
1. Introduction to Accounting standard.
2. International Financial Reporting
Standards (IFRS).
3. Indian Accounting Standards.
Meaning of Accounting Standards.
■ Accounting standards are the written statements consisting of rules and
guidelines, issued by the accounting institutions, for the preparation of
uniform and consistent financial statements and also for other disclosures
affecting the different users of accounting information.

■ These Accounting standards (AS) are issued through an accounting body or a

regulatory board or many times by means of the federal government
straight. In India, the Indian Accounting specifications are issued by way of the
Institute of Chartered Accountants of India (ICAI).
■ Accounting Standards mainly deal with four major issues of
accounting, namely:
1. Recognition of financial events.
2. Measurement of financial transactions.
3. Presentation of financial statements in a fair manner.
4. Disclosure requirement of companies to ensure stakeholders are not
misinformed.
Objectives
■ The main aim is to improve the reliability of financial statements
■ To ensures comparability.
■ To provide a standard for the diverse accounting policies and
principles harmonize them.
Benefits of Accounting Standards:

■ Attains Uniformity in Accounting.

■ Improves Reliability of Financial Statements.
■ Prevents Frauds and Accounting Manipulations
■ Assists Auditors
■ Comparability
Limitations of Accounting
standards:
■ Brings Inflexibility & Rigidity.
■ Difficult To Choose Among Alternatives.
■ Restricted scope.
■ Time-Consuming.
■ Involves High Costs.
List of Accounting Standards issued by ICAI:

ACCOUNTING STANDARD DESCRIPTION

AS 1 Disclosure of Accounting Policies
AS 2 Valuation of Inventories
AS 3 Cash Flow Statement
AS 4 Contingencies and events Occurring After Balance Sheet Date
AS 5 Net Profit or Loss for the period, Prior Period items and Changes in
Accounting Policies
AS 7 Construction Contracts
AS 9 Revenue Recognition
AS 10 Property, Plant and Equipment
AS 11 The Effect of Changes in Foreign Exchange Rates
AS 12 Government Grants
List of Accounting Standards issued by ICAI:
ACCOUNTING STANDARD DESCRIPTION
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18 Related Party Disclosures
AS 19 Leases
AS 20 Earnings Per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income
AS 23 Accounting for Investment in Associates
List of Accounting Standards issued by ICAI:
ACCOUNTING STANDARD DESCRIPTION
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions, Contingent Liabilities and Contingent Assets
International Financial Reporting
Standards(IFRS)
■ The International Financial Reporting Standards (IFRS) are
accounting standards that are issued by the International Accounting
Standards Board (IASB) with the objective of providing a common
accounting language to increase transparency in the presentation of
financial information.

■ What is IASB?
The International Accounting Standards Board (IASB), is an
independent body formed in 2001 with the sole responsibility of
establishing the International Financial Reporting Standards (IFRS).
Features of IFRS
• Relevance: IFRS helps in providing relevant information to the users so that it
makes a difference to the decisions about a company taken by the users of the
statements.
• Faithful representation: Financial statements are complete and free from
bias and error.
• Comparability: You can compare financial statements from one period to the
next or for two companies in the same industry so that you can make informed
decisions about the companies.
• Verifiability: Different people could reach the same decision based on the
information.
• Timeliness: You make information available to users in good time. Historical
information quickly becomes out of date.
• Understandability: You present and classify information clearly and
concisely to make it understandable to users.
First-time Adoption of
International Financial Reporting
Standard
It sets out the procedures that an entity must follow when it adopts
IFRSs for the first time as the basis for preparing its general purpose
financial statements.
The IFRS grants limited exemptions from the general requirement to
comply with each IFRS effective at the end of its first IFRS reporting
period.
Objectives of IFRS
➢ To develop, in the public interest, a single set of high quality,
understandable and enforceable global accounting standards that
require high quality, transparent and comparable information in
financial statements.

➢ To promote the use and rigorous application of those standards.

➢ To bring about convergence of national accounting standards and

International Accounting standards and IFRS to high quality
solutions.
Advantages of Adopting IFRS

■ It would create a single set of accounting standards

around the world.
■ It would reduce the time, effort, and expense of preparing
multiple reports.
■ It would make it easier to monitor and control subsidiaries
from foreign countries.
■ It would offer more flexibility in the accounting practices.
■ It would make it easier for all companies to do business in
foreign countries.
Disadvantages of Adopting IFRS

■ It would increase the cost of implementation for small businesses.

■ It would require global consistency in auditing and enforcement.
■ Scope for manipulation - Due to flexibility in the interpretation of
Reporting standards
Indian Accounting Standards

■ Ind AS stands for Indian Accounting Standard and are converged

standards for IFRS (International Financial Reporting Standards).
■ Ind AS are documents and policies that provide principles for
recognition, measurement, treatment, presentation and disclosures
of accounting transactions in the Ind AS financial statements.
■ For example: Ind AS 16 on Property, Plant and Equipment (PPE) will
provide principles on the criteria on the basis of which PPE is
recognised, what all cost will form part of PPE etc. .
Objective of Indian Accounting
Standards:
■ In order to make the financial statements uniform, Ind AS were introduced
which are converged form of IFRS(Global Standards).
■ Moreover, introduction of Ind AS will bring consistency in the accounting
practices and principles followed by companies in India and other companies
across world, leading to enhanced accessibility and acceptability of
financial statements by global investors.
Benefits of Ind AS
■ Wider acceptability:
Since Ind AS are converged form of IFRS which are widely acceptable and will give
confidence to the user of financial statements.
■ Comparability of Financials:
Financial statements prepared using Ind AS are easily comparable with the
financial statements prepared by companies of other countries.
■ Attracts Foreign Investment:
Adopting Ind AS may attract foreign investors to invest in Indian Companies as that
will ensure better comparability with similar companies across the globe.
■ Saves financial statement preparation cost:
For multinational companies, it will be beneficial as it will be able to use the same
accounting standards in all the markets in which they operate. This will save
preparation costs of aligning financial statements of Indian company with other
operations.
Who is required to comply with Ind AS?

1. Companies listed on stock exchanges in India or outside India with a net

worth of Rs. 250 crore or more: All companies listed on stock exchanges in
India or outside India with a net worth of Rs. 250 crore or more are required to
comply with Ind AS. This includes subsidiaries, joint ventures, and associates of
such companies.
2. Unlisted companies with a net worth of Rs. 500 crore or more: Unlisted
companies with a net worth of Rs. 500 crore or more are required to comply with
Ind AS. This includes subsidiaries, joint ventures, and associates of such
companies.
3. Holding, subsidiary, joint venture, or associate companies of companies
mentioned above: Any company that is a holding, subsidiary, joint venture, or
associate of the companies mentioned above is also required to comply with Ind
AS.
IMPACT OF IND AS
1. Improved transparency: The adoption of Ind AS has led to increased transparency
in the financial reporting of Indian companies. The convergence with IFRS has made
it easier for investors and analysts to compare the financial statements of Indian
companies with those of international peers.
2. Better quality of financial reporting: Ind AS has also led to better quality of financial
reporting as it requires companies to provide more detailed and accurate
information in their financial statements. This has resulted in better decision
making by investors and analysts.
3. Challenges in implementation: The implementation of Ind AS has been a
challenging process for many Indian companies. It requires significant changes in
accounting policies, processes, and systems, which can be time-consuming and
expensive. However, the benefits of improved financial reporting and transparency
outweigh the challenges.